Business as usual in Australia markets after vote

SYDNEY (Reuters) - It will be business as usual in Australian financial markets after the opposition Labor Party won a general election, with the decisiveness of the victory and the continuity of economic policy removing uncertainty for investors.

Labor swept to power in Saturday's vote, as widely expected, ending 11 years of conservative rule. Inheriting an economy in its 16th year of expansion and with unemployment at 33-year lows, Labor has promised an economic conservatism that differs little from the previous administration.

"The type of result that would have worried markets would have been a close one that would be difficult to call," said Stephen Roberts, research director at Lehman's Grange Securities unit.

"A decisive result is what the markets needed."

He added that both parties are centrist and policies won't change that much. Incoming Prime Minister Kevin Rudd has promised to keep existing government bureaucratic structures, "so when they get their feet under the table, it will the same people briefing them," Roberts said.

He saw markets moving on Monday on external factors, with a rebound in U.S. stocks and an easing of immediate concerns over credit markets boosting Australian equities and helping the Australian dollar.

One potential challenge for the new administration, however, will be interest rate rises.

A growing number of Australian home-owning voters are struggling with rates at 11-year highs after five hikes in the past 19 months, and a further move to 7.0 percent is likely in February, according to a Reuters poll of economists.

Labor is committed to keeping the policy of the previous government of John Howard of running budget surpluses of 1 percent of gross domestic product.

But Rudd has unveiled promises worth A$59 billion ($51 billion), including A$31 billion in tax cuts, relying on large budget surpluses as Australia rides a commodities boom. Such largesse may be inflationary and further fuel for rate rises, which have helped the Australian dollar gain 11 percent against the U.S. dollar this year.

Rudd's government may try and reinforce the message that the central bank is independent, thus distancing itself from rate rises, said Brian Redican, senior economist at Macquarie.

"That would be a win-win and would make the conduct of monetary policy easier," he said.

What the new government will do with its first budget next year will also be its first real test, he said, especially if it finds itself with more income than forecast.

(Editing by Lincoln Feast)

($1=A$1.15)